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  • A Superb FOMC & the Greatest Economic Boom Ever [Edit or Delete]0 comments
    Aug 9, 2011 3:47 PM
    It was a superb FOMC
     
    -no rate hikes forever 
    -more intervention promissed 
    -3 dissenters (not that their opinions matter)
    -more of the usual 'slow growth'/headwinds blah blah blah
     
    The sudden collapse of stock market has become the new national/media fixation. Even on life.com there's pictures of the NYSE and traders in apparent anguish on the front page. 
     
    Disregard all of it. Disregard Europe, housing, unemployment, pain at the pump, 2012 elections, debt, povery and food stamp usage, small biz failure, falling consumer confidence etc. 
     
    Those things dont matter (or at least not in proportion to the blog coverage these topics get). 
     
    We're still in the greatest eonomic boom ever that ever. Here's why (don't expect to see this in the media or on the blogs):
     
    You've got profits & earnings for S&P 500 companies growing faster than even in the so called '90's boom'with 70-80% of S&P 500 companies beating estimates for the 11th strait quarter. You have these massive gains in productivity and exports, which negates any weakness due to unemployment. A PE ratio of just 11 versus 20-40's in 90's. You got rates @ 0% forever versus 5-6% in the late 90's. It's virtually imposible for eonomic picture to be any more bullish than it is now. 
     
    Treasuries are already so low — and globally there are few safe-haven alternatives — it's extremely unlikely the downgrade would significantly affect the interest rates the U.S. government pays on its $14.3 trillion in debt. The largest foreign holders of U.S debt — China and Japan — have not signaled plans to dump their U.S. securities. It was federal debt that got downgraded — U.S. bonds — but so far stocks are taking the biggest hit.
     
    The world is awash with so much liquidity that when the dow does retest 12800 the 10 year yield will still be below 2.70. Gold going to $2000/ounce, oil $99, gas $5/gallon, silver $65/ounce, etc. 
     
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